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Volume 9 - Opinions of Counsel SBEA No. 49

Opinions of Counsel index

Assessment roll (designation of owner) (life estate and right of occupancy contrasted) (conditional life estate) - Real Property Tax Law, § 502:

A residency requirement is not necessarily inconsistent with a life estate. A grant of the “life use” of premises on condition that the grantee permanently reside thereon creates a life estate, if the instrument contains no evidence of intent to the contrary.

A senior citizen lives in a house which she occupies under an instrument giving her the “exclusive life use of such premises for so long as she shall continue to permanently reside thereon.” The assessor asks whether the senior citizen’s interest is such that she may be granted the senior citizen’s exemption (RPTL, § 467). The answer depends upon whether the instrument grants her a life estate or a mere right of occupancy.

As we have stated, if a person holds a life estate in real property, he or she must be considered the legal owner of the property, both for purposes of the designation of the owner on the assessment roll (RPTL, § 502) and for purposes of exemption administration (see, e.g., RPTL, §§ 458, 458-a, 467), as long as the life estate is in effect (see, 1 Op.Counsel SBEA Nos. 34, 59, 88; 3 id. No. 45; 9 id. No. 41). On the other hand, if a person holds merely a “right of occupancy” in real property, he or she should not be considered the owner of the property for these purposes (5 Op.Counsel SBEA No. 12; 9 id. No. 41).

An unconditional grant of “life use” of premises should be construed as granting a life estate in the premises, absent evidence in the instrument clearly indicating that the grantor intended otherwise (9 Op.Counsel SBEA No. 41). However, when a condition is attached to the grant, such as the residency requirement considered here, the issue becomes more complex. If a condition is fundamentally incompatible with the ostensible grant of “life use,” it may follow that the grantor actually intended to grant a mere right of occupancy, and so the interest so created would have to be construed as a right of occupancy (Real Property Law, § 240(3)).

It is well established that conditions may be attached to a life estate. For example, a life estate may be subject to termination at the will of the grantee (Garner v. Garish, 63 N.Y.2d 575, 473 N.E.2d 223, 483 N.YS.2d 973 (1984)), or upon his or her remarriage (In re Keenan’s Estate, 302 N.Y. 417, 99 N.E.2d 219 (1951)). The life tenant may be required to maintain the property and to pay the taxes thereon (In re Gaffer’s Estate, 254 A.D. 448, 5 N.YS.2d 671 (3d Dept. 1938)), although these obligations ordinarily belong to the life tenant even if the grant is silent on the issue.

It might appear that a residency requirement is conceptually distinguishable from such conditions because it diminishes the grantee’s autonomy over the property. By imposing the requirement, the grantor is seeking to retain some measure of control over the use of the property.

Nevertheless, it appears that a residency requirement may be attached to a life estate under New York law {*}. The leading case on this issue is In re Roger’s Will, 251 A.D. 478, 296 N.Y.S. 872 (2d Dept., 1937), involving a grant of life “use” that was to terminate if the grantee vacated the premises for two years or more. The Court specifically held that this grant was a conditional life estate and not “a mere right of occupancy.”

This holding is reasonable because the distinguishing feature of a life estate is the right to the “rents and profits” arising from the property (see, e.g., 9 Op.Counsel SBEA No. 41; Warren’s Weed New York Real Property, Vol. 3, “Life Estates” (4th Ed., 1990)). When a grant of “life use” is subject to a residency requirement, it is still the grantee, and only the grantee, who has the right to the rents and profits.

For example, if the premises consist of several dwelling units, a grant of “life use” conditioned upon residency entitles the grantee, and no one else, to the rents from those other units. Likewise, if the premises include productive farm land, a grant of “life use” subject to residency gives the grantee the exclusive right to reap the benefit of the harvest. By contrast, a grant of the mere “right to occupy” the premises entitles the grantee to none of these rents or profits.

In conclusion, a residency requirement is not inconsistent with a grant of “life use” where the grantee has the exclusive right to the rents and profits arising from the property. Hence, in our opinion, a grant of “life use” subject, to a residency requirement should be construed as a life estate, absent evidence that the grantor intended otherwise.

December 10, 1991

{*}  In some states, such a grant would be construed as a conditional life estate; in others it would be construed as something less (see, e.g., Annotation, Quantum or Character of Estate or Interest Created by Language Providing Premises as a Home, or Giving or Granting Same for Such Use, 45 A.L.R.2d 699, § 1 (1954), and cases cited therein; 28 Am.Jur.2d Estates § 63 (1966), and cases cited therein). According to the Restatement of Property, such a grant would create a conditional life estate (id., § 112, illustration 3 (1936)).